Franklin Credit Holding Details Restructuring

in Credit Holding Corp. has released a statement expanding on the restructuring of its loans, pledges and guarantees with banks. Last week, Columbus, Ohio-based [u][link=http://www.mortgageorb.com/e107_plugins/content/content.php?content.3277]Hunting Bancshares Inc. announced[/link][/u] it had picked up $514 million of troubled loans from the subprime lender. ‘Importantly, we can accelerate the resolution and recovery of the value embedded in these assets, as this relieves Franklin from the ownership of these assets," Huntington's President and CEO, Stephen D. Steinour stated. "In addition, Franklin can devote more of their attention to developing their servicing business." Frankling Holding says that pursuant to the restructuring agreements, approximately 83% of the company's portfolio of subprime mortgages and other real estate assets were transferred to Huntington Capital Financing LLC. Franklin Holding has also announced salary cuts and staff reductions at subsidiary Franklin Credit Management Corp. (FCMC). The company says the cost-savings measures will not compromise FCMC's ability to provide servicing and collection services for third parties. ‘As a significant component of the restructuring, the servicing arm of the company, FCMC, was awarded a market rate agreement by [Huntington National Bank] to service the transferred loans,’ notes Thomas Axon, chairman and president of Franklin Holding. "We appreciate the opportunity that the bank has given the company to utilize its ability, unlike traditional mortgage servicing companies, to service challenging assets and to employ innovative and nontraditional solutions to assist clients and their borrowers in one of the worst economic environments this country has ever experienced," Axon adds. Franklin Holding says the restructuring accomplished a number of objectives, including entry into a market-rate servicing agreement with the Huntington National Bank, enabling FCMC to generate fee income from servicing the portfolio; release of 30% of the equity in FCMC from the company's pledges to the bank, with the possibility of release of up to an additional 50% based on cash collections from servicing of the portfolio over the next five years; entry into an amended $13.5 million credit facility with the bank; and enabling FCMC to seek additional third-party subservicing contracts. SOURCE: Franklin Holding [link=hyperlink url][